A British woman who became unwittingly embroiled in a love triangle with a New Zealand banker has been held in a police cell in Dubai for over a month after the affair ended in early morning violence.

Danielle Spencer, 25, had been on a date with Toby Carroll, a real estate analyst for HSBC bank in the Gulf emirate and had returned with him to his flat.

The next morning Mr Carroll's Brazilian former girlfriend, who has been named only as Priscilla, arrived at the flat and found them in bed together, according to police.

Mr Carroll had only broken up with her the day before.

Priscilla then began taking a knife to the furniture and fittings, slashing them, before turning to Miss Spencer who fled terrified into the bathroom and locked herself in, it is claimed. When the woman allegedly began using the knife to attack the door, Mr Carroll called the police for help.

All three were arrested and taken to Bur Dubai police station where they have been held in underground cells ever since. Miss Spencer and Mr Carroll are understood to have been questioned in relation to possible charges of sex outside marriage – a criminal offence in the United Arab Emirates.

Priscilla has been questioned over suspected knife offences. The reason for the long delay in bringing the case to court is said to be inconsistencies in the version of events she has given to police and prosecutors.

The case is the latest in a long line of western "love triangles" that have ended in the hands of the police. In 2009, a British pilot for Emirates Airlines, Vincent Antia, reported his wife Sally to police after he discovered he was seeing a friend from Liverpool in the Radisson SAS Deira Creek Hotel in the city centre.

Mrs Antia and her friend, Mark Hawkins, were both jailed for a month for adultery, and then deported.

Human rights groups have objected to the way laws against sex outside marriage are implemented in the UAE and other Gulf countries.

The latest case happened on December 12. "It was their first date," said one source familiar with the case. "The Brazilian girl came early in the morning and found her with the boyfriend.

"She took the knife and knifed the curtains.

"She ran after the British girl who was hiding in the bathroom. The man was afraid and called the police."

Both the women are in the single women's cell at Bur Dubai police station, which has been subject to repeated complaints about overcrowding. It is meant to hold 40 people but regularly houses 90 women or more, sharing three to a mattress.

The source said that despite their proximity Miss Spencer and Priscilla had managed to avoid coming to further blows. "They have become friends – it is now all OK," the source said.

The case has been referred to the public prosecutor, who has interviewed all three and is now considering what charges should be brought. Sentences for sex without marriage among non-Muslims normally range from one to three months, though occasionally leniency can be shown if they are able to claim they are engaged to be married.

A spokesman for the British embassy said it was aware of the case. "The consular team are providing assistance," she said.

A spokesman for HSBC said: "We can confirm that he is an employee, that he is in custody and that we are in contact with him."

Miss Spencer has lived in Dubai since around 2005 and worked in real estate until recently. She also studied at Dubai University.

One of Miss Spencer’s local friends said he had missed a call from her at 5.30am as she was being arrested but had not been able to see her since.

She was able to call him last week and said she was “doing OK” but that conditions were “not too good”.

“I have been down to the police station five or six times but they won’t let me in because I’m a local and not related to her,” the friend, who asked just to be called Mohammed, said. “I have applied for bail for her at least five times but it has been rejected.

“I have got a message to her family but there is not much they can do.

“She called me last week. She said someone was looking after her, but the conditions were not too good.”